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22 January 2013

OECD Likes Innovation; Who Doesn't?

The Organisation for Economic Co-operation and Development (OECD) took the bold step of calling for inclusive innovation as a solution to tackling the problem of inequality in development. Innovation is one of the emergent buzz words thrown at development challenges over the past year or so. The word often is often used to talk about technical advancements that support development gains such as a re-designed toilet or treatment as prevention from the spread of HIV.

The argument that innovation will address the problem of inequality falls a bit short. The United States is bustling with innovation and entrepreneurship while income inequality steadily widens. Research from Acemoglu, Robinson and Verdie finds a link between inequality and entrepreneurial effort. “[S]ome countries will opt for a type of “cutthroat” capitalism that generates greater inequality and more innovation and will become the technology leaders, while others will free-ride on the cutthroat incentives of the leaders,” they write.

The findings by the authors show that innovation is not necessarily the problem. It is not hard to find examples of innovations that come out of low-income countries. Mobile phone take-up continues to rise across sub-Saharan Africa and the private sector is offering new products that make clean water possible in a slum.

A conversation about innovation is important when focused on what encourages and prohibits innovations. If a farmer in Malawi develops a new irrigation method, but is unable to connect to markets or is restricted by banking services his idea may never see the light of the day. “[H]ow is innovation going to solve the problems of developing countries when global governance has no political will to solve them," asked Alexis Habiyaremye, assistant professor of economics at Antalya International University in Turkey, in his remarks to SciDev.Net.

Tackling the barriers to innovation is where development should be focused. A girl who dies young due to disease cannot even begin to think about innovation. Nor will a boy who faces layers of corruption find a path to success. Innovation despite these challenges shows that it is happening, but is not properly supported.